Sin Tax Found Effective in Reducing Cases of Certain Diseases, a Review Finds

Smoking tobacco products and drinking of alcoholic beverages and sodas have been known to contribute to lifestyle diseases. These refer to non-communicable diseases like cancer, heart disease, diabetes, and stroke. In order to help combat lifestyle diseases, governments have imposed sin taxes to reduce the access of people to bad vices. And according to a recent review, sin taxes are indeed successful in reducing cases of lifestyle diseases.

Sin Tax Used in War against Lifestyle Diseases

Sin taxes are a type of excise tax that is specifically levied for goods or products that can harm the population. Products subjected to sin taxes include alcohol, tobacco, candies, drugs, soft drinks, coffee, sugar, gambling, fast foods, and even pornography. The implementation of sin tax on these goods exists in many countries, such as Australia, Germany, Japan, the Philippines, Singapore, United States, and the United Kingdom.

Industries oppose the implementation of sin tax because their products will cost significantly higher, reducing their profit from potential customers. But governments and health institutions are adamant because this decreases the financial and health crisis in the society. According to several studies published in The Lancet, the implementation of the sin tax is an effective method to address the growing problem of NCDs.

“The effectiveness is fairly well-established. On tobacco and alcohol, we have had evidence for many years that showed that basically, people do react to the changes in price that the taxes cause and reduce their consumption as a result,” said Franco Sassi, an author of one of the studies and a professor at Imperial College London.

In China, tobacco products contributed to 1 million deaths from cancer and other lung diseases. The products were also associated with almost 7 million deaths worldwide. As a whole, NDCs have been held responsible for 38 million deaths every year, with 50 percent of the individuals dying before the age of 70. The largest chunk of those deaths was connected to excessive alcohol consumption, unhealthy diets, and smoking tobacco products, according to the World Health Organization.

To determine that sin tax actually works, the researchers looked into the impact of higher prices among related products in 13 poor, emerging, and wealthy countries. Their review found evidence that low-income households were likely to purchase less alcohol and sugary products, compared to high-income households.

Members of low-income households were more productive at work because of their improving health due to the lack of access to sin taxed products. Moreover, those household members were likely to have better-paying jobs that could offset any taxes they might be paying for. As an effect, people in low-income households who were heavy drinkers or smokers were unlikely to spend money on hospitalization caused by NDCs.

“They’re going to save money on unhealthy products and they’re going to consume less and be healthier,” said Rachel Nugent, chair of The Lancet NCD economics taskforce.

For those low-income households that decided to pay more can still benefit from sin tax, even if their health is at risk. One of their possible benefits from sin tax is access to pro-poor programs that should be implemented by governments. The revenue from sin tax can increase the funds for vital services provided by governments to society.

“What the article is suggesting is that overall, taxes are likely to have even greater impact on the health status of lower-income people and when you factor everything in, it may even be of benefit to them financially,” explained David Hammond, a professor in the School of Public Health and Health Systems at the University of Waterloo.

However, Prof. Sassi suggests that adding taxes should not be the only policy governments should try. There are other policies governments can implement to reduce cases of NDCs, such as regulations pertaining to nutritional information in product packaging, prohibition of specific advertising to children and teenagers, and educational programs for communities. If communities feel that they can gain something from government programs for public health, they are likely to accept the implementation of taxes.

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Taxation on Alcohol and Tobacco Products

The World Health Organization supports taxation on alcoholic beverages and tobacco products. In alcohol taxation, the policies that increase the price aim to help governments generate tax revenue, reduce alcohol intake of communities including young people and chronic drinkers, and prevent those who may adapt to the habit.

For tobacco products, the WHO found that implementation of policies is the most effective method to control tobacco use. Policies, such as banning of smoking in public areas and sin tax, are potent and practical approaches to reduce the widespread use of smoking.

According to the organization, just an increase of 10 percent in the price of every pack of cigarettes would reduce the demand by four percent in high-income territories, while it is five percent in low-income territories. The effect is more potent among younger people, especially minors, compared to adults because of their lack of sufficient funds to buy expensive cigarettes.